Nvidia (NASDAQ: NVDA ) CEO Jensen Huang is one of the most respected names in the field of artificial intelligence (AI). As the leader of the largest AI semiconductor company working closely with the world’s leading cloud computing companies, he has unique insight into their evolving needs.
That’s why investors are paying close attention to what Huang has to say. On stage at Computex Week in Taipei, Huang presented Marvel Technology (NASDAQ: MRVL ) CEO Matt Murphy described his company’s chips as indispensable. “That’s why you’re going to be the next trillion-dollar company,” Huang said.
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Marvel stock has soared since those comments, and as of this writing has a market cap of about $278 billion. If Huang is right, the stock will almost quadruple from here.
Is Marvel the next trillion dollar company?
Marvell specializes in optical interconnect chips that transmit data at ultra-high speeds. As Huang said, those chips are essential for optimizing data centers full of expensive, high-powered GPUs. Ensuring that data is sent to where it is needed as quickly as possible can provide huge cost savings at scale.
To that end, Marvell and Nvidia agreed earlier this year to work closely together, using Nvidia’s EnviLink platform to optimize chip designs across Marvell’s portfolio. Nvidia invested $2 billion of its own cash in Marvel stock.
Management raised its outlook for the interconnected business with its first-quarter earnings report last month. It now expects 70% annual growth for this segment. This should support full-year cumulative revenue growth of 40%, with continued acceleration through 2028.
Another key driver of revenue growth in fiscal 2028 and beyond is Marvell’s custom AI accelerator (XPU) business. Management said it expects the relatively small segment to grow 20% this year, but it will double as a major Tier-1 XPU customer by 2028 (probably Microsoft) batch production begins. Management predicts $10 billion in revenue from custom AI chips in fiscal 2029. That’s more than Marvel’s total revenue last year.
Thanks to its leadership in networking chips and the fast-growing custom computing business, there’s no doubt Marvel is well-positioned to generate significant revenue growth over the next few years. While Huang didn’t set a timeline for his $1 trillion announcement, management’s guidance and commentary calls for Marvel to reach a price-to-sales ratio of around 40 by early 2029. Based on analysts’ current estimates, its trailing P/E ratio should reach 127. For reference, Nvidia currently trades for 21 times sales and 33 times earnings.
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